It’s not an accurate tool for calculating a currency’s value, but it does give a general idea of it. We’re talking about the Big Mac Index, created by The Economist magazine 37 years ago. Since the Big Mac is sold in much of the world, the index uses the price of this burger in the United States as a benchmark and compares it to its price in other countries, which gives us an idea of whether a currency is overvalued or undervalued relative to the dollar. Do you know which country’s currency was the most overvalued in June of this year according to the Big Mac Index?

ANSWER

Uruguay. Adjusted for each country’s GDP, the Uruguayan peso tops the list of the most expensive currencies, with an overvaluation of 46.3%. There are several reasons for the Uruguayan peso’s relative strength: the export boom—the country set a historic export record in 2022— the high interest rate maintained by the central bank; and the country’s political and financial stability, which attracts foreign investment. However, Uruguay is not the only Latin American country with an overvalued currency. Colombia, Mexico, and even Argentina (at the official exchange rate) also appear on the list.